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Sandton – What does the fast food and financial services sectors have in common? Customers have the same low trust levels for both.
MMI Holdings CEO Nicolaas Kruger said on Wednesday that this global trend echoed in South Africa and it was up to the leaders in the industry to solve this damaging reputation.
Kruger was part of a panel discussion at the Association for Savings and Investment South Africa (Asisa) conference at the Sandton Convention Centre.
“There is a lack of financial literacy, which we have to enhance,” the CEO of Momentum and Metropolitan said.
“As an industry in South Africa, savings products have improved, but we are not where we should be.
“There is not enough value for money for clients and not enough investment coming back for shareholders,” he said.
“We need goal driven investment products that help you achieve a certain goal, like education,” he said.
While Cosatu’s retirement funds co-ordinator Jan Mahlangu – also on the panel – slammed the industry because “profit motives won’t benefit members”, Kruger said there was one thing that Cosatu and the industry were in agreement about: “Putting the client at the centre”.
Consumption culture
Kruger said South Africa’s savings levels were amongst the lowest in the world.
“A lack of culture of savings and a culture of instant gratification has been a big issue,” he said. “We are a consumption driven society.”
Financial Services Board deputy executive officer Jonathan Dixon questioned how long this culture would continue.
“The consumerist culture might be a temporary post democracy effect or it could be long term,” he said. “Financial education is key to changing that.”
Stokvels should not be ignored
Kruger said non-traditional forms of saving, such as stokvels, should not be ignored. “Stokvels contribute between R25bn and R40bn per annum to savings,” he said.
He added that there was a “huge gap” in the return for retiring.
Normally, you would invest 15% of your income and get a 4% return, generating 75% capital to retire on.
However, currently, “if SA was a person”, the replacement would only be between 20% and 30%. “We need to be two and a half times higher than that,” he said.
